States are trying to lower drug prices. Here's how their efforts are being thwarted

Those states are finding their efforts hit by heavy opposition, according to a perspective piece published in The New England Journal of Medicine on Thursday. (Getty/Tero Vesalainen)

High drug prices may be a hot-button issue for the Trump administration with its blueprint to take on the problem released back in May. But faced with increased budget burdens tied to rapidly expanding prescription drug costs, state officials aren't waiting around for federal solutions for drug prices.

“States are feeling as if they need to take action to address this problem because the federal government hasn’t done so,” said Rachel Sachs, a law professor at Washington University School of Law in an interview with FierceHealthcare. “But their ability to act is limited.”

Those states are finding their efforts hit by heavy opposition. For instance, Massachusetts sought a waiver for its Medicaid program last fall, confronting new blockbuster therapies that have received accelerated approval through the Federal Drug Administration and a steep price tag, according to a perspective piece by Sachs published in The New England Journal of Medicine on Wednesday.

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As part of the request, Massachusetts asked for the ability to decline coverage of prescription drugs with limited evidence from clinical trials.

Such drugs have become a growing strain on the state’s Medicaid budget, Sachs wrote with her co-author Nicholas Bagley, a law professor at the University of Michigan. The authors said Massachusetts hoped the ability to credibly strike a drug from its coverage list would yield bigger concessions on price, but the effort came up short and the request was denied by the Centers for Medicaid and Medicaid Services in late June.

In the same request, Massachusetts floated a closed formulary, a common practice in public and private health insurance where only a few drugs in each category receive coverage to encourage competitive pricing. While the request was not denied, CMS put forth a controversial alternative instead: Massachusetts would have to negotiate the price of every drug it covered and forgo all price reductions federally mandated for Medicaid.

Earlier this year, FiercePharma reported that in Maryland, Nevada and California, lawmakers passed bills to challenge drug pricing. But, industry trade group PhRMA filed suit against the bills in California and Nevada, and the Association for Accessible Medicines sued in Maryland.

Among other arguments, PhRMA said both the California and Nevada laws are "unprecedented and unconstitutional" because they impact commerce in other states, FiercePharma reported. PhRMA has also launched the "Let's talk about cost" campaign to address some of the factors in drug pricing. Maryland, which tried to prevent price gouging of essential drugs in response to meteoric prices for the life-saving drug EpiPen, saw the federal Fourth Circuit Court of Appeals strike down its statute in April. The state requested a rehearing, which was denied in July.

All eyes will turn to Vermont in the months to come said Sachs, which is the next state in line to test the federal government’s limits. It became the first state to pass legislation this spring allowing for the importation of reduced-cost prescription drugs from Canada. But that initiative still has an important hurdle to clear: It needs Health and Human Services to certify the program by July 2019.

There's also been movement on price transparency legislation at the state level, said Sachs. For instance, in March, Oregon's governor signed a new law requiring drug makers who hike their drug prices 10% or more to tell the state about their costs.

And while state actions to actual curb costs may be unsuccessful, they are a way to force the government to make a statement or act on the issue, Sachs said. She predicts state-level initiatives will continue to ramp up and become more extreme or concerning if left unaddressed.

“States are hoping for more help from regulators, from federal legislatures,” Sachs said. “I fully expect for this to continue to be an issue going forward at the federal level, at the state level, legislatures and administrative bodies.”